What are marketplace platforms and software? Why are they important?

If you imagine pushing a virtual shopping cart down the aisles of an online store, or browsing items in an ecommerce business’s mobile app, do you picture an individual retailer?

Those sites are certainly plentiful, but when it comes to online shopping, the counterpart to the single site — the multi-vendor marketplace platform — is an equally major player.

Marketplace sites function as meeting spots in cyberspace for multiple buyers and sellers to transact. Marketplace platform software assists businesses in creating and managing their marketplaces. The term marketplace “platform” refers to the nuts and bolts: the marketplace software and technology used to run the multiple-online-store website. It includes various functionality and key marketplace features, such as the ability to provide efficient search, accurate product recommendations, easy checkout, and helpful customer support that, combined, translate into a rewarding user experience.

With its many-seller format, a multi-vendor platform is a great venue for attracting and helping buyers find new products (as well as new services in service marketplaces) and sellers, which may have been vetted to ensure that they meet the online business marketplace’s standards. Like standard ecommerce sites, marketplace business sites must provide an optimized customer experience with key features for buyers. 

Popular marketplace sites that host many sellers typically provide two things online shoppers want: lots of product choices and low prices. However, they must also provide cost-effective online retail pricing and feature-rich options that scare up ecommerce sales for their third-party sellers. They are drawing in retailers by helping alleviate some of the pain points online marketplace sellers face, such as payment processing and fulfillment. Plus, they can help merchants on these crowded sites effectively market themselves to their customer bases.

Marketplace sites fall into two categories:

  • Those that sell their own merchandise in addition to hosting other merchants
  • “Pure” marketplaces, which don’t sell their own products (akin to online mall landlords)

Fun facts about marketplace platforms

Did you know:

  • The first online marketplace, Boston Computer Exchange, made its debut in 1982. More than a decade later, in 1995, the Amazon marketplace and eBay followed 
  • Now, multi-merchant shopping sites account for more than half of all global ecommerce
  • According to Digital Commerce 360, sales on the top 100 platforms accounted for 62.7% of the money spent online in 2020
  • In 2022, online sales on B2B marketplaces were up 100% compared with 2021
  • By 2023, marketplace sites were projected to account for 68% of B2C ecommerce
  • By 2025, the online marketplace sector in the United States is projected to catch up with with the direct ecommerce platform market
  • One of the biggest marketplace winners? Etsy. With Coronavirus, 60,000 of its merchants started selling face masks, doubling the platform’s sales

Impressive numbers. So why is this crazy marketplace-site growth happening now (and continuing to happen since the pandemic)?

As with other ecommerce market phenomena, the quality of marketplace software and platforms has been steadily improving. Now, consumers, B2C sellers, plus B2B buyers and sellers alike, have discovered the many advantages of the sophisticated marketplace platform, and that’s led to the creation of an insanely competitive market.

Why are marketplace platforms all the rage?

For consumers, the advantages of top online marketplaces over single sites include being able to choose from wide selections of items, which are sold through multiple storefronts by a multitude of vendors at competitive prices and with various payment options. Sites such as Upwork and Booking.com, along with the obvious giants like Alibaba, are a few examples. 

For marketplace suppliers, these sites afford major benefits as well. They provide big-name recognition and easy access by a large number of potential customers, along with professional user interfaces and selling services such as order fulfillment and payment. 

“Marketplaces are now very much the norm when it comes to books, food delivery, or ticketing, where they represent at least 25% of consumer spend, notes OC&C. “They are also continually increasing their share against ecommerce players in the travel, clothing, and furniture sectors.” What makes a marketplace so attractive? “Delivery of high-quality demand to providers and high-quality supply to buyers.”

B2B marketplace sites

Business-to-consumer (B2C) marketplaces are not the only ones thriving. Business-to-business (B2B) marketplaces, those hosting wholesale transactions and facilitating reselling of products and services, are also hot. A B2B ecommerce marketplace platform may offer data that helps shoppers make choices, and also help with B2B market logistics such as negotiating contracts, invoicing, order management, and inventory management.

In the case of a B2B marketplace solution, a good search engine that allows searching by other identifiers (e.g., the UPC code) is also a plus. 

The role of search on a marketplace platform

Multi-vendor ecommerce marketplace sites are home to millions of items, making search a feature that must perform heroically. The ability of a marketplace to offer shoppers the best search experience across a likely large and diverse catalog is key in differentiating from the competition and attracting new customers.

Whether a marketplace is B2C or B2B, its shoppers must be able to quickly locate the items they need or want.

A competent search engine that can do a marketplace site proud must be:


A marketplace site’s base technology must be powerful enough to support truly massive catalogs. It must be able to handle a staggering volume of transactions on demand, plus keep track of items going out of stock, rapidly changing item popularity, and pricing adjustments. All that information needs to be promptly updated in the marketplace site index to enable almost-real-time response — down to a few milliseconds for search-as-you-type querying.

Relevance centered

Once a marketplace’s catalogs are indexed, the next implementation challenge is to return highly relevant results to shoppers. Satisfying search requires expert understanding of everything from user intent to synonyms and likely typos. 

Cognizant of good seller behavior

Managing sellers’ requests and expectations makes marketplace search a unique challenge. To attract more sellers, especially at the early stages, marketplaces often allow sellers to list products more easily, which can unfortunately result in poor-quality product data. To overcome potentially low data quality, in the relevance logic, a marketplace must prioritize good seller behavior, such as fully completing product listings, having good shopper feedback on delivery and payment, and quickly responding to user questions.

Workable with front-end implementation

A marketplace search engine must power more than just a simple search bar, encompassing all the marketplace’s various front ends. It should power or easily integrate with advanced search and discovery scenarios: full search-result pages including dynamic faceting, content carousels, autocomplete dropdowns, and federated search. Plus, it must provide a unified omnichannel experience across web, mobile web, and mobile applications.

Competent with personalization

Marketplace search engines must support customization of their relevance logic using signals such as product popularity, margins, and conversion rate. Regardless of whether people are on a single retailer site or in a vendor store marketplace, consumers and business buyers expect to be courted with personalized shopping. A modern marketplace search engine ensures the success of this ecommerce solution, expertly tailoring search results based on individuals’ browsing and shopping history.

Usable by non-technical teams

Marketplaces have distinct merchandising needs, such as executing on promotional campaigns, managing for seasonality, and showcasing best-selling items. This often involves providing nontechnical teams with the tools to assess search performance and make changes without the help of a developer. Having a user-friendly interface for those tasks is a major plus.


Marketplace search engines must be able to seamlessly manage ecommerce website challenges such as traffic surges from various geographic locations. Promotions that involve searching — and could thereby drive spikes in search traffic — also underscore the need for reliability with this business model. Marketplace websites can aid online sellers by running sophisticated promotional campaigns using search, for example, customizable treasure hunts that hide heavily discounted items in random categories or include discounts in search results for random queries.


As with a single-company ecommerce store, a marketplace site’s inner workings could be subject to malicious attacks, so search-engine security is a must.

Your ecommerce marketplace solution

Need results-producing search for your budding or established ecommerce marketplace platform?

At Algolia, we specialize in supplying marketplace operators with AI-powered marketplace search. Whether you’re running a multi-vendor ecommerce platform startup or focused on scalability of an established small-business marketplace, our search-as-a-service (SaaS) API is ready to streamline your marketplace solution with exactly the right upgrades.

Get more details on how powerful marketplace search can help you meet your online business needs, then contact us.

About the authorVincent Caruana

Vincent Caruana

Senior Digital Marketing Manager, SEO

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